Proliance International, Inc. (NYSE Amex: PLI) today reported
net sales of $61.0 million and a net loss of $14.4 million, equal
to $0.92 per share, for the first quarter ended March 31, 2009.
This compares to net sales of $76.5 million and a net loss of $6.2
million, equal to $0.40 per share, in the year ago quarter.
Underlying the Company�s performance, and as previously
reported, the lack of adequate financing in 2008 and the first
quarter of 2009 resulted in significantly lower sales of domestic
automotive and light truck heat exchange products that the Company
purchases overseas. The Company believes that the lack of
sufficient financing reduced total net sales by over 20% in the
first quarter. In addition, first quarter 2009 results were also
negatively affected by a number of additional factors, including
lower than expected sales volume in the Company�s domestic
automotive and light truck air conditioning business, necessitating
a $0.8 million increase in reserves for excess inventory; a $1.5
million write-off of a receivable from a customer which is in the
process of liquidation; restructuring costs of $0.8 million related
to the reduction of personnel and infrastructure expenses in the
U.S. and Mexico; and a $1.9 million write-off of previously
capitalized financing costs no longer related to the refinancing
process. The Company also noted that additional restructuring
actions to improve future performance are expected in subsequent
quarters.
While Proliance has been unable to purchase sufficient product
to meet strong demand, fill rates on many products manufactured by
the Company have continued to be satisfactory. A recent amendment
to Proliance�s loan agreement with its senior lender, to
temporarily remove remaining revolving loan blocks, is increasing
the availability of funds by a limited amount, which should help to
improve near-term fill rates. However, the prompt refinancing of
the Company�s senior debt to provide greater liquidity is becoming
increasingly critical for the successful operation of the
business.
While international sales and profitability were slightly lower
than the year ago period, first quarter 2009 results also reflected
the negative effect of currency translation due to a stronger US
dollar versus the Euro and the Mexican peso, and general softness
related to the worldwide recession, offset in part by continued
strength in the marine business in Europe.
Refinancing Update
The Company has, with the assistance of investment banking
firms, run and continues to run, an extensive process to identify
and consider all available options in an attempt to refinance its
current credit agreement with the objective of providing Proliance
with adequate liquidity to continue to operate its business. As a
result, Proliance has received a number of indications of interest,
including some refinancing proposals described in the Company�s
prior communications. However, the refinancing proposals described
in previous communications have not proven to be viable under
today�s difficult financing conditions and all the current
remaining offers contemplate a going concern sale of Proliance as
part of a bankruptcy filing by the Company. While the Company would
prefer a transaction outside of bankruptcy and continues to explore
all other available options, it may have no other choice but to
select one of these offers to preserve the business, enable it to
continue to properly serve customers, improve fill rates and
maximize enterprise value.
For reference, in February 2008, tornadoes destroyed most of the
Company�s heat exchange product inventory and distribution facility
in Southaven, MS. Proliance�s lead lender required the Company to
apply a significant portion of the insurance proceeds to pay down
debt under its senior indebtedness, thereby significantly reducing
the Company�s liquidity and making it difficult for Proliance to
finance the acquisition of product to meet sales demand. The
Company promptly initiated an effort to refinance its debt and
raise additional capital. However, the process has been hampered by
the continued tight and chaotic credit and financial markets and
other factors. The challenges faced by the Company are discussed in
greater detail in the Company�s Form 10-K for the year ended
December 31, 2008 and other SEC filings.
Conference Call
Proliance will host a conference call today at 9:00 AM ET with
Charles E. Johnson, President and CEO, and Arlen F. Henock, CFO, to
discuss the results for the first quarter ended March 31, 2009. The
call will be accessible live via a webcast on Proliance�s Investor
Relations Webcast page at http://www.pliii.com/39-webcasts?side or
http://www.wsw.com/webcast/cc/pli2/. A webcast replay will be
available shortly thereafter.
About Proliance International, Inc.
Proliance International, Inc. is a leading global manufacturer
and distributor of aftermarket heat transfer and temperature
control products for automotive and heavy-duty applications serving
North America, Central America and Europe.
Forward Looking Statements
Statements included in this press release, which are not
historical in nature, are forward-looking statements made pursuant
to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Statements relating to the future financial
performance or liquidity of the Company are subject to business
conditions and growth in the general economy and automotive and
truck business, the impact of competitive products and pricing,
changes in customer product mix, failure to obtain new customers or
retain old customers or changes in the financial stability of
customers, changes in the cost of raw materials, components or
finished products, the discretionary actions of its suppliers and
lenders, and changes in interest rates. Such statements are based
upon the current beliefs and expectations of Proliance management
and are subject to significant risks and uncertainties. Actual
results may differ from those set forth in the forward-looking
statements. When used in this press release, the terms
"anticipate," "believe," �efforts,� "estimate," "expect," �goal,�
"may," "objective," "plan," "possible," "potential," "project,"
�proposal,� �pursue,� "will" and similar expressions identify
forward-looking statements.
Additional factors that could cause Proliance's results to
differ materially from those described in the forward-looking
statements include the effects of the financial crisis and turmoil
in the capital markets, the absence of refinancing commitments, the
global recession and other factors identified in Proliance�s 2008
Annual Report on Form 10-K and Proliance's other subsequent filings
with the SEC. The forward-looking statements contained in this
press release are made as of the date hereof, and Proliance does
not undertake any obligation to update any forward-looking
statements, whether as a result of future events, new information
or otherwise.
�
PROLIANCE INTERNATIONAL, INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (in thousands, except for per share
amounts) (unaudited) � �
Three Months Ended
March 31, 2009 2008 � Net sales $ 60,978 $ 76,540
Cost of sales � 54,678 � � 65,458 � Gross margin 6,300 11,082
Selling, general and administrative expenses 15,237 12,831
Restructuring charges � 835 � � 172 � Operating loss (9,772 )
(1,921 ) Interest expense 3,020 3,736 Debt extinguishment costs 7
576 Write off of financing costs 1,905 � Unrealized (gain) from
warrant fair value adjustment � (327 ) � � � Loss before taxes
(14,377 ) (6,233 ) Income tax (benefit) provision � 16 � � (57 )
Net loss � ($14,393 ) � ($6,176 ) � Net loss per common share -
basic and diluted � ($0.92 ) � ($0.40 ) � Weighted average common
shares - basic and diluted � 15,758 � � 15,730 � � �
PROLIANCE
INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (in thousands) � � �
March 31, 2009
December 31, 2008 (unaudited) � Cash and cash equivalents $
2,233 $ 2,444 Accounts receivable, net 45,924 57,005 Inventories,
net 72,375 84,586 Other current assets 4,427 5,198 Net property,
plant and equipment 21,162 21,886 Other assets � 14,186 � 16,086
Total assets $ 160,307 $ 187,205 � Accounts payable $ 62,451 $
64,788 Accrued liabilities 17,414 18,546 Total debt 36,600 44,837
Warrants outstanding, at fair value 234 � Other long-term
liabilities 16,792 16,845 Stockholders� equity � 26,816 � 42,189
Total liabilities and stockholders� equity $ 160,307 $ 187,205 � �
PROLIANCE INTERNATIONAL, INC. SUPPLEMENTAL
INFORMATION (in thousands) (unaudited) � �
Three Months Ended March 31, 2009 2008
�
SEGMENT DATA:
Net sales: Domestic $ 38,636 $ 49,717 International � 22,342 � �
26,823 � Total net sales $ 60,978 � $ 76,540 � � Operating income
(loss): Domestic ($6,126 ) ($883 ) Restructuring charges � (432 ) �
(172 ) Domestic total � (6,558 ) � (1,055 ) International (654 ) 62
Restructuring charges � (403 ) � � � International total � (1,057 )
� 62 � Corporate expenses � (2,157 ) � (928 ) Total operating
income (loss) � ($9,772 ) � ($1,921 ) � �
NET CAPITAL EXPENDITURES
$ 777 � $ 1,437 � �
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